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A.M. Best Comments on Credit Ratings of Genworth Financial, Inc. and Its Subsidiaries Following Announced Delay in Regulatory Approval Process

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Besthas commented that the Long-Term Issuer Credit Ratings (Long-Term ICR) of “bb-” of Genworth Financial, Inc. (Genworth) [NYSE:GNW] and Genworth Holdings, Inc. (both domiciled in Delaware), as well as their existing Long-Term Issue Credit Ratings (Long-Term IR) will remain under review with negative implications following the announcement that Genworth and China Oceanwide Holdings Group Co., Ltd. (Oceanwide) have withdrawn their joint voluntary notice with the Committee on Foreign Investment in the United States (CFIUS). In addition, the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb” of Genworth Life and Annuity Insurance Company (GLAIC) (Richmond, VA), and the FSRs of B (Fair) and the Long-Term ICRs of “bb+” of Genworth Life Insurance Company (Wilmington, DE) and Genworth Life Insurance Company of New York (New York, NY) also will remain under review with negative implications.

The announcement also highlights that the two companies intend to refile the transaction at some point with additional mitigation approaches, including working with a U.S. third-party provider. This is the third time the parties have withdrawn their filing seeking approval of Oceanwide’s $2.7 billion acquisition of Genworth. Separately, A.M. Best notes that Genworth received approval from the Virginia State Corporation Commission, Bureau of Insurance to proceed specifically with the proposed acquisition of GLAIC this past month. While regulatory approvals remain outstanding, the two companies remain committed to the transaction.

A.M. Best notes that with all merger and acquisition transactions, there is a fair amount of execution risk, including successfully obtaining all necessary regulatory approvals. However, the ongoing delays in the CFIUS process places continued uncertainty on the potential successful timely execution of this transaction. A.M. Best will continue to monitor the progress of the transaction through ongoing discussions with management. In addition, A.M. Best continues to evaluate the ongoing operating performance of each rating unit under Genworth for any developments that may impact the ratings, including third-quarter 2017 performance and the completion of all assumption reviews.

In addition, in the event the acquisition by Oceanwide cannot be completed, Genworth also announced it is looking at options to address its May 2018 debt maturity of $600 million. These options include a potential refinancing, current holding company cash, and potential asset sales. A.M. Best also will monitor Genworth’s progress in securing a solution to address the May 2018 debt maturity, and the impact it may have to the overall creditworthiness of the company.